John Longwaite will receive 100,000 in 50 years. His friends are very jealous of him. If the funds are discounted back at a rate of 14 percent, what is the percent , what is the present values of his future “pot of gold”?
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John Longwaite will receive 100,000 in 50 years. His friends are very jealous of him. If the funds are discounted back at a rate of 14 percent, what is the percent , what is the present values of his future “pot of gold”?
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- A 65 year-old man is retiring and can take either $500,000 in cash or an ordinary annuity that promises to pay him $50,000 per year for as long as he lives. Which of the following statements is MOST correct? Select one: a.Because of the time value of money, the man will always be better off taking the $500,000 up front. b.The higher the interest rate, the more likely the man will prefer the $500,000 lump sum. c.If the man expects to live more than 10 years, then he will prefer the annuity. d.If the man is certain the company will not default on its future payments, he should select the $50,000 per year. e.None of these solutions is correct.Thomas Finley wishes to become a millionaire. His money market fund has a balance of $183,204 and has a guaranteed interest rate of 10%. How many years must Thomas leave that balance in the fund in order to get his desired $926,000?Your grandparents would ilke to establish a trust fund that will pay you and your heirs $125,000 per year forever with the first payment 10 years from today. If the trust fund earns an annual return of 2.4 percent, how much must your grandparents deposit today?
- Martin wants to provide money in his will for an annual bequest to whichever of his living relatives is oldest. That bequest will provide $6000 in the first year, and will grow by 7% per year, forever. If the interest rate is 10%, how much must Martin provide to fund this bequest?An individual who makes $32,000 per year anticipates retiring in 30 years. If his salary is increased by $600 each year and he deposits 10% of his yearly salary into a fund that earns 7% interest, what is the future worth at retirement?Henry Quincy wants to withdraw $30,000 each year for 10 years from a fund that earns 8% interest. How much must he invest today if the first withdrawal is at year-end? How much must he invest today if the first withdrawal takes place immediately?
- John is nearing retirement and is considering an annuity offer from New York Insurance Corp, which promises to pay him $30,000 on the last day of each year, for 20 years. If John believes that he could earn 5% if he invested his money himself, the present value (rounded to the nearest whole dollar) to John of this offer is:Millionnaire left the majority of this estate to fund five prizes, each to be awarded annually in perpetuity starting on year after he died. If he wanted the cash award of each of the five prizes to be $52,000 and his estate could earn 10% per year, how much would he need to fund his prizes? Formula: PV = c / r PV = 52,000 / .10 PV = 520,000 If he wanted the value of each prize to grow by 5% per year (to keep up with the inflation), how much would he need to leave? Assume that the first amount was still $52,000. Formula: PVgp = C1 / r - g PV = 52,000 / .10 - .05 Nobel needs to leave 1,040,000 If his heirs decided to invest the amount of money you calculated in (b) at 10% per year, how much would they have in 2020, 124 years after his death? Financial Calculator N = 124 I/Y = 10 PV = 1,040,000 PMT = 0 CPT FV = 1.41164811Your godmother put $2,000 in a trust fund for you. In 10 years the fund will be worth $5,000. What is the rate of return on the trust fund?
- Suppose you make an annual contribution of P9,993 each year to a college fund for a niece. He is 6 years now, and you will start next year and make the last deposit when he is 19. The fund is a money market account earning 6.74% per year. What will it be worth immediately after the last deposit?An investment will pay $150 at the end of each of the next 3 years, $200 at the end of Year 4, $400 at the end of Year 5, and $550 at the end of Year 6. If other investments of equal risk earn 8% annually, what is its present value? Its future value? Allison and Leslie, who are twins, just received $35,000 each for their 26th birthday. They both have aspirations to become millionaires. Each plans to make a $5,000 annual contribution to her "early retirement fund" on her birthday, beginning a year from today. Allison opened an account with the Safety First Bond Fund, a mutual fund that invests in high-quality bonds whose investors have earned 8% per year in the past. Leslie invested in the New Issue Bio-Tech Fund, which invests in small, newly issued bio-tech stocks and whose investors have earned an average of 14% per year in the fund's relatively short history. If the two women’s funds earn the same returns in the future as in the past, how old will each be when she becomes a…Your uncle has $375,000 and wants to retire. He expects to live for another 25 years, and he also expects to earn 7.5% on his invested funds. How much could he withdraw at the beginning of each of the next 25 years and end up with zero in the account?